Homebuyer Tax Credit Update

by Tom Tousignant

in Blog, Home Buying, Mortgages

You are probably aware that the first time home buyer (FTHB) credit of $8,000 ends soon – contracts must be signed by April 30th and close by June 30th.  A few rules that you may not be aware of:

  1. For homes purchased after November 6th, single filers with modified adjusted gross income in excess of 125k (225k for married filers) cannot take the credit.
  2. The income threshold is lower if the home was purchased prior to November 7th (phase out starts at 75k for singles and 150k for married couples).
  3. If you move within three years of buying the home, you have to pay the credit back.

You do have the ability to choose which year to take the credit.

  • If you were a FTHB in 2009, you can elect to amend your 2008 return or claim the credit in 2009.
  • Similarly, if you are a FTHB in 2010, you can elect to claim the credit in 2009 or 2010.

This rule offers flexibility if you go over the income threshold in one year, but not the other.

If you have lived in your current home for 5 of the past 8 years, you can claim a credit of $6500 using the same rules that apply to FTHB’s, above.

I’m not a huge fan of the governments decision to spend our money this way, but, I do think you will do a better job spending the $6500 /$8,000 than they will, so go ahead and enjoy the cash if you are buying a house!

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